Mike MilliganFounder and CEO, 1.oak Financial · Founder and CEO, 1.oak Financial

Taxes in Retirement: 3 Key Things Retirees Should Know

29 Sept 2025 · 1 min

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0:56

In this brief segment of Mike Milligan's YouTube video, a listener asks about how required minimum distribution (RMD) percentages change with age. Mike explains that while the IRS factor used to calculate RMDs gets smaller as you age, the resulting withdrawal percentage actually rises—about 5% in the 80s, climbing to 6%‑6.5% in the 90s. He warns that these increasing withdrawals can push retirees into higher federal income tax brackets, potentially moving them from a 22% bracket to 24%, 32% or even 35% as they age. The exchange ends with a light‑hearted joke about dying early, underscoring that the advice is not to hasten death but to plan for the tax impact of RMDs.

You know, Mike, I'm not a whiz at math, but I do know $40,000 of $1 million is 4%. Does it go up each year as you get older when you're collecting those RMDs? I mean, the IRS, would you expect anything less from them, Gary?
No, exactly not. They, of course, like the older you get, the larger the factor becomes, or I mean, actually the smaller the factor becomes, the higher the percentage that you take out. So like in your 80s, you're taking 5%. If you're lucky enough to live into your 90s, you're taking out 6%, 6.5%. And as those percentages continue to go up, it'll push you through tax brackets. And so where maybe you retired in the 22% bracket, because of RMDs, you may end up in the 24%, 32%, or 35% bracket.
Right. So die early. No, no, I'm kidding. No, don't do that. Don't take that advice. Don't take that advice.